The role of AfCFTA in enhancing capital accumulation through vegetables and fruits trade: a case of Tanzania
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Date
2025-03
Journal Title
Journal ISSN
Volume Title
Publisher
Eastern and Southern Africa Journal of Agricultural Economics & Development
Abstract
Tanzania's ratification of the African Continental Free Trade Area (AfCFTA) presents an
opportunity to enhance regional trade and stimulate capital accumulation in the fruits and vegetables
sectors. This paper is based on a study that explored how trade liberalization driven by AfCFTA can
promote capital accumulation through increased net exports, the reinvestment of trade surpluses, and
improved financial linkages. Using the Dynamic Equilibrium Model for Economic Development,
Resources, and Agriculture (DEMETRA)—a single-country computable general equilibrium (CGE)
model—and the Modular Applied General Equilibrium Tool (MAGNET), a global multiregional
CGE model, the study simulated two trade liberalization scenarios: (i) tariff-only reductions and (ii)
reductions combining both tariff and non-tariff measures (NTMs). These scenarios were evaluated
across four trade schedules: Revenue from Tariff (REV), which focused on optimizing government
revenue; Agricultural Trade (AGR), which prioritized food security and market access; Intermediate
Inputs Trade (INT), which supported industrialization through supply chain enhancements; and
Revealed Comparative Advantage (RCA), which targeted competitive export sectors. The study
findings indicate that the Tariff + NTM scenario yielded be er trade outcomes, with net exports for
fruits projected to reach 115.79 billion TZS and for vegetables 86.26 billion TZS by 2035, compared
to 112.25 billion TZS and 83.48 billion TZS, respectively, under the Tariff-only scenario. The RCA
and INT schedules generated the most significant trade surpluses, highlighting the importance of
strategic tariff reductions and targeted trade facilitation. Key policy recommendations include
reducing NTMs through streamlined customs procedures, investing in export-support infrastructure
such as cold storage and transport networks, and enhancing competitiveness through value addition
and regional market integration. These measures would maximize the benefits of AfCFTA in
strengthening Tanzania's agricultural trade, fostering capital reinvestment, and ensuring long-term
economic resilience.
Description
Journal article
Keywords
AfCFTA, Vegetables and Fruits, Net export, Trade schedules